Bancor V2 – Liquidity reloaded
One of the primary concerns surrounding trading new cryptos is limited liquidity. Most digital assets are traded against the two most popular cryptocurrencies, Bitcoin, and Ethereum which further aggravates the liquidity problem. New Crypto and DeFi entrants can get discouraged because there is a limited choice available to them along with the woes of higher transaction costs and fees that some centralized exchanges have.
In comes Bancor, a solid blockchain protocol that attempts to bridge this difference. Bancor lets users convert their diverse virtual currency tokens almost instantly without the need to exchange them on any cryptocurrency exchange. Virtual coins can be traded which goes a long way in combating the liquidity battle. Its new network is built on a new class of cryptocurrencies called smart tokens and smart contracts.
Bancor V2 – Features
July 2020, the release of Bancor Version 2 is imminent and we intend to elucidate all that you must know what the V2 has up its sleeve.
- Bancor V2 attacks the liquidity problem in the heart by providing 100% disclosure to a single token.
- The bonding curve that represents the relationship between price and token supply has worked out to become more performance-oriented. This has reduced slippage meaning the difference between the expected price of a trade and the actual trade execution price has reduced considerably.
- An integration of Chainlink price oracles with Automated market maker (AMM) has ensured the reduction of impermanent loss which is the difference between holding tokens in an AMM and what you hold in your wallet.
- There is also increased support for other lending protocols.
Problems that Bancor V2 will solve
Slippages can happen anytime, but it occurs the most when market orders are used in volatile markets. It also can happen when a large order is executed but the volume falls short at the selected price to maintain the present bid/ask spread.AMM’s have been at the receiving end for needing huge amounts of liquidity to achieve volumes with order-book based exchanges.
- Flexible bonding curve that aims to magnify the capital efficacy of AMM’s.
- The new bonding curve will reduce slippage by using up pooled resources within the price conversion intervals.
- Liquidity providers will now be able to conjointly fund AMM’s which will guarantee more volumes with limited capital requirement.
Impermanent Loss mitigation
AMM technology sure has taken off but users who provide liquidity to AMM’s have experienced devaluation of their staked tokens relative to token holding. This risk known as the impermanent loss has deterred many commercial institutional users from provisioning liquidity.
- Bancor V2 helps create AMM’S with pinned liquidity reserves which will enable holding the relative value of reserves stable. It will use prices from ChainLink’s price oracles. Curve’s stablecoin pool is a fitting example of a successful AMM building with pegged reserves but they are limited to stablecoins and synthetic coins.
- But this new version does not restrict itself to stablecoins or wrapped tokens expanding its solution to even volatile assets. Liquidity providers just need to hold the token to which liquidity is being provided.
- Token teams and end-users benefit from good profits from trading fees.
Single token exposure
We now know that AMM’s needed liquidity providers to maintain exposure to tokens in their reserves. Users contribute their resources to a network by parking their tokens in a smart contract for autonomous swaps. The more the capital in AMM, the easier it is for other users to swap the token. But, the community-sourced liquidity faces a hurdle that is taking exposure to a separate reserve asset while providing liquidity.
- 100% exposure to single ERC20 token. Liquidity providers do not need any reserve token.
- Option to select exposure to any token in AMM open from 0-100%.
- Liquidity providers can maintain their long position while they earn rewards and trading fees.
Liquidity providers faced a constant issue of low profitability because of their decreased ability to earn lending interest. The interoperability of open source De Fi protocols also was questionable.
- AMM’s integrated lending protocols will allow liquidity providers to generate lending interest on top of trading fees.
- Liquidity can be added or removed with ERC20 tokens. AMM’s will utilize wrappers for lending and reverse-lending the tokens.
- Liquidity providers can now realize higher profitability.
With the new version, Bancor will rope in more liquidity to the protocol. Being experts in the liquidity pool, Bancor V2 intends to create disruption by decreasing the opportunity costs and driving further profits.
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Deriswap: What you Need to Know
Deriswap launched defi legend Andre Cronje – the founder of Yearn Finance
The founder of the revolutionary DeFi protocol Yearn. Finance, Andre Cronje has been an avid crypto promoter. In his attempt to bring products that will redefine the industry, Andre Cronje has introduced a new project.
Dubbed Deriswap, the new protocol will meld the different segments of DeFi including swaps, options, and loans all in one platform. His latest project ‘Deriswap’ is a move towards bringing capital efficiency, something which has not been envisioned in the industry.
In a post published Cronje said:
“Deriswap allows for a consolidated, capital-efficient market for trading, Options, Futures, and Loans, allowing LPs [liquidity providers] to keep their exposure and enjoy additional fees and rewards,”
Deriswap information has been restricted to a point because it is still under audit. He has explained that this new protocol would immensely benefit liquidity providers(LPs) in addition to maintaining exposure and extending additional rewards. There are many popular protocols that enable swaps and loans, however, Deriswap varies in its ability to offer multiple functions within one contract.
Cronje has been around for some time and has already participated in a lot of projects. His other recent projects include Eminence and Keep3r. Eminence garnered the ire of critics as the gaming platform was hacked for $7 million in users’ funds.
But Andre Cronje’s popularity and his intellect with respect to the industry have been always high which is why despite all the earlier troubles people have been funding the contract even before the project has been audited and announced.
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Basis Cash launches a new-age stablecoin in DeFi space
Basis Cash : What is it?
Basis Cash, originally known as Basecoin, has launched its stable coin into the new DeFi era. Basis Cash is was based (pun-intedned) on a stablecoin basis which had $133 million in funding after which the US regulators intervened.
The smart contracts opened early Monday, but what also has to be remembered is that this is not the first time when any base-inspired stablecoin is released. At the end of August Empty set was released and now has $100million in market cap.
One of two anonymous leaders off the project who goes by ‘Rick Sanchez’ said:
“In the long term, we look forward to seeing Basis Cash be used widely as a base layer primitive such that there is organic demand for the asset in many DeFi and commercial settings.”
As is the case of most stablecoins. Basis Cash (BAC) stands pegged to the US dollar implying that one BAC should be equal to the crypto equivalent of one USD. The price of one BAC should be equal to the crypto equivalent of one USD.
Two crypto assets Basis Bonds and Basis shares will be managing the Basis Cash’s price. Beginning at the end of November 50,000 BAC will be given in a 5-year period implying that 10,000 per day to people who would put any of the 5 stablecoins DAI, YCRV, USDT, SUSD, and USDC in their smart contract.
In this case the depositors would not lose more than 20,000 stablecoins from any single account. In addition to this, an incentive on a daily basis will be paid on a pro-rata basis. The users also will get their coins back at any point in time.
Basis Cash will have nothing locked away to guarantee its worth. The only thing that backs it will be an algorithmic method which will help in finding the real market demand for BAC.If the BAC drops below a dollar, the system will automatically issue Basis Bonds. The bonds issued can be bought for one BAC and can be redeemed for one new BAC when the price is much more than $1.
Nader Ali-Naji who originally launched Basis said:
“A lot of people have reached out to me about Basis Cash. It seems to be gaining traction among the people who backed me with Basis given how many people have asked me about it, but I don’t know anyone who’s definitively decided to back the project.”
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Saffron Finance: SFI a new DeFi bluechip? This hidden crypto gem seems primed for massive growth.
November 10, 2020
Saffron Finance or SFI, is currently one of the hottest defi projects right now that is still very much under the radar.
Just as we have reported on YFI, CORE, and Curve long before most DeFi news organizations, this is one we’re definitely adding to our watchlist.
Just like the aforementioned tokens, SFI seems to be in the same league of technical expertise mixed with an extremely creative application, all with code that is completely original. Here’s what you need to know about Saffron Finance.
What is Saffron Finance?
Saffron. Finance is bent towards innovative offerings in the crypto world. It is a protocol meant for the tokenization of on-chain assets. There is an advantage of the format of the tokenization of on-chain assets as it allows the liquidity providers great flexibility and unhindered access to the base collateral leveraging the benefits of staking.
Typically due to the overcrowding of different scenarios, Liquidity providers have to undergo insurmountable impermanent losses as a result of extreme volatility.
Yet, Saffron is one such protocol that narrows down such outcomes and provides liquidity providers with the necessary dynamic exposure.
Customize your risk
Liquidity providers can now select and customize their risk and return profile with the use of Saffron Pool Tranches. Pools are segregated into different tranches each having their own set of properties. The different tranches here are:
AA Tranche: In this case, the LPs add liquidity to the AA tranche earn less interest but are protected and covered in case of loss from platform risk. The covered capital comes from the principal and interest earnings of A tranche LPs. They have a great share in the SFI token generation grabbing 80% from it all.
A Tranche: Under this category, LPs add liquidity to the A tranche and earn far better interest compared to the previous, yet vulnerable enough to lose their interest in case they are exposed to platform risks. The liquidity providers under this tranche earn 10% of the SFI tokens generated per epoch. Their earnings will not be included in covering the first loss of AA tranches.
S Tranche: The S tranche like the A tranche earns 10% of SFI generated per epoch. The S epoch has an underhand mechanism to maintain the exact value of the tranche interest multiplier. It maintains the position of equilibrium between A and AA tranches with its functionality.
Saffron individually tokenizes the future earning stream and the NPV of the used-up capital in every tranche. The earnings-based on tokenized holdings are distributed across all tranches through payback waterfalls.
The Epochs are discussed in tranches are of 14-days in length. In the epoch period, the liquidity providers can earn interest on the platforms and mine SFI tokens – the native token of Saffron Finance.
When liquidity gets locked in the pool, they can trade their Saffron LP tokens defining their ownership of the pool. But when the 14-day epoch period ends, the Liquidity providers can remove their liquidity with SFI mined and interest earned. The first epoch was already kicked off on 1 Nov and all the liquidity was added to the S tranche. The other two tranches will be available in the second epoch.
Saffron has been launched with DAI liquidity mining. With this, all DAI will be added to the Saffron pool and is used for compounding and earning interest. The best part about it all is that in the future versions of the protocol additional currencies and platforms will be added dynamically.
SFI is generated at the end of the epoch and is redeemable in proportion to the total outstanding dsec tokens generated during that epoch. They are redeemable in proportion to the total outstanding dsec tokens generated in that epoch.
Saffron smart contracts have already been deployed and their code has been verified on etherscan and already been added to a GitHub repository. The team is still working on code audits but the team’s ongoing development timeline has allowed for it and the entire set of Saffron smart contracts. The Saffron Pool, adapter, strategy, and token contracts have been tested with 10,000 DAI in the best test epoch on the Ethereum mainnet.
SFI Pools and Adapters
The platform has pools of liquidity that collect deposited base assets from LPs and deploy them on platforms in order to earn interest. Adapters connect this pooled capital to platforms.
The already launched first adapter is DAI/Compound adapter which connects the DAI pool to the Compound platform giving the DAI pool LPs the chance to pool together and earn interest on Compound. This strategy connects all pools and adapters together, selects the best adapter for capital deployment. It also generates and distributes SFI tokens to LPs at the end of every epoch.
By offering asset collateralization on its platform, liquidity providers have access to dynamic exposure and have a great advantage of selecting customized risk and return profiles.